What you need to know about loot boxes in computer games

Do you play computer games or does someone in your family play them?

More than 164 million adults in the United States play computer games and three-quarters of all Americans have at least one gamer in their household, according to the Entertainment Software Association.

Loot boxes are the containers gamers come across in many games filled with a mix of virtual items players might want: clothes or gear to customize their avatar, or weapons or skills that could give them an advantage over other players in the game. Some of the items are valuable in the game, but many aren’t. And players won’t know what they’re getting until they open the box.

What you may not know about loot boxes is that players often have to pay real money to open them.

Problems with loot boxes

• The boxes are a temptation and a snare, according to the Kotaku article “Loot Boxes Are Designed to Exploit Us.” They’re a devious economic trap, designed to take players’ money. You’re not expected to resist them forever.
• Kids can spend money on loot boxes without their parents’ permission, Clifford Sussman, a psychiatrist, is quoted as saying in the 7 On Your Side article “Video Game Loot Boxes Face Addiction Allegations.” “Families are complaining about lots of money being spent on these games and on these loot boxes. Thousands of dollars being taken from their credit card.”
• A study showed that the more gamers spend on loot boxes, the more severe their problem gambling. Gamers who paid for loot boxes, rather than engaging solely in unpaid openings, scored more than twice as high on measures of problem gambling than those who didn’t, according to the article “Paying for Loot Boxes Is Linked to Problem Gambling, Regardless of Specific Features Like Cash-out and Pay-to-Win,” which reported on the study.

With the problems with loot boxes becoming more well known, lawmakers are looking at ways to regulate them.

The National Law Review offers the following list of action being considered and adopted.

Outside the United States

• Australia: The Office of eSafety has expressed concern that loot boxes may be a gateway to later addictive gambling behavior, and the state of Victoria stated that loot boxes are a form of gambling.
• Belgium: The Gaming Commission has stated that loot boxes are “games of chance” subject to gambling laws.
• Japan: The National Consumer Affairs Agency issued an opinion that virtual items in paid loot boxes could be considered “prizes” where players find the items to be strongly desirable, even without any demonstrable real-world monetary value.
• Netherlands: The Gaming Authority issued a report that games with paid loot boxes and the ability to transfer items are illegal under gambling laws.
• China: Game companies must disclose odds for paid loot boxes. (Some companies have avoided this requirement by selling other items – such as in-game currency – and pairing those items with “free” loot boxes.)
• South Korea: The Fair Trade Commission fined video game companies nearly $900,000 in 2018 for misstating odds related to loot boxes. In April 2019, it requested information from video game developers regarding in-game purchases, particularly related to underage users.
• The United Kingdomand New Zealand: The gambling commissions have stated that loot boxes offering purely virtual rewards aren’t gambling (presumably with no authorized secondary market).
• France: The Autorité de régulation des jeux en ligne or ARJEL took a somewhat similar approach to the United Kingdom and New Zealand in its 2017-18 report, although it seemed to suggest that loot boxes may not be in line with the public policy on gambling.

Inside the United States

Several states – California, Hawaii, Indiana, Minnesota, New York, and Washington – have considered legislation related to loot boxes. Most of the state bills would require various types of disclosure and/or limit sales to persons 18 and older. However, none of the states have yet passed legislation to require disclosures or limit sales.

At the federal level, Sen. John Hawley, R-Missouri, introduced the Protecting Children from Abusive Games Act in May. The bill would ban loot boxes and microtransactions (in-app purchases to speed up game play) in games specifically targeted at children as well as games for which the game developer has “constructive knowledge” that users are minors. Although the bill has bipartisan support, it’s not clear whether it will proceed to further consideration, as the Federal Trade Commission held a workshop on Aug. 7, to consider consumer protection issues related to loot boxes and microtransactions. Public comments may be submitted online here through Oct. 11.

Information on parental controls

Consumers can find out more about parental control options currently available for different game systems at the website for the Entertainment Software Rating Board, or by checking with the game system’s manufacturer or the game’s publisher. If the game is an app, parents can check to see what settings the phone’s operating system offers – such as the ability to require a password for in-app purchases – and read the game’s ratings and reviews at the app store.